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Real Estate Investments for a Secure FutureTue, 30 Dec 2014 22:41:22 +0000en-UShourly1http://wordpress.org/?v=3.4.2Property Management: How Important Is It?http://dsdinvestorgroup.com/?p=1428
http://dsdinvestorgroup.com/?p=1428#commentsTue, 02 Dec 2014 02:03:20 +0000Shaun Omarhttp://dsdinvestorgroup.com/?p=1428Read more »]]>I just wanted to take a minute to re-affirm the importance of having the right Property Management Company on your team. I read this article recently in the Sun Sentinel Newspaper in South Florida (November 28, 2014 issue) that really brings to light how important they are.

On July 17, 2012 a slaying took place on a property in which one tenant shot and killed another for no apparent reason. The family of the slain tenant sued the property management company for negligence, arguing they should have known the tenant was a risk and never should have rented his family an apartment. The management company recently settled the suit for $1.5 million dollars.

Florida Law does not require a landlord to run a background screening but does recommend doing so. The management company did run a background screening which revealed the tenant had rented an apartment in another of their complexes and was evicted for causing disturbances and making death threats. The failure by the property manager was in not actually reading the screening which they had paid for and had in their possession.

This was a large management company that this happened to, so don’t think just because they are big they must be good. The situation could have been avoided and a family kept in tact if they would have simply read what they paid to have done, a simple background screening.

Next to buying a property right the most important thing is the management company that is going to run your property and protect your asset. I have heard of several other horror stories just like this one, most of them occurred because as property owners we didn’t do a proper background screening of our property management company.

Don’t be a statistic, do your research and check not only the management company but also the property manager they will be placing on your property. Also, don’t always choose by the price they charge; sometimes the cheapest one might be the best one for the job but not always. Just like the most expensive isn’t always the best choice. Don’t be afraid to pay a little more to get the quality and piece of mind you are looking for. I promise it will be cheaper in the long run.

One of the difficulties we face in our industrialized age is the fact we’ve lost our sense of seasons.

Unlike the farmer whose priorities change with the seasons, we have become impervious to the natural rhythm of life. As a result, we have our priorities out of balance. Let me illustrate what I mean:

For a farmer, springtime is his most active time. It’s then when he must work around the clock, up before the sun and still toiling at the stroke of midnight. He must keep his equipment running at full capacity because he has but a small window of time for the planting of his crop.

Eventually winter comes when there is less for him to do to keep him busy.

There is a lesson here. Learn to use the seasons of life. Decide when to pour it on and when to ease back, when to take advantage and when to let things ride. It’s easy to keep going from 9 a.m. to 5 p.m. year in and year out and lose a natural sense of priorities and cycles. Don’t let one year blend into another in a seemingly endless parade of tasks and responsibilities.

Keep your eye on your own seasons, lest you lose sight of value and substance.

DALLAS–The local office market has seen continuing improvement in market fundamentals in the second quarter of 2014. According to the latest report by Cushman & Wakefield tenant demand is stronger than it has been since 2006.

Direct and overall absorption has reached 2 million square feet in 2014, this is an increase of 37% compared to the 1.5 million square feet absorbed during the same time period in 2013. Major tenants who took space this year include Santander Consumer Finance, Perkins Coie, Lockton Companies, Liberty Mutual, Kohl’s, Nationstar Mortgage, Conifer Solutions, Ernst & Young, Time Warner Cable, Bell Helicopter and Trend HR.

To date there has been 8.3 million square feet of leasing activity, an increase of 9.8%. Class A space accounted for more than half of the leased space (57.3%).

Rental rates have also been rising this year. Asking full-service rental rates rose 3.9% to $21.19 per square foot. Class A space saw the greatest increase, 5.4%, rising to $26.22 per square feet.

During this period 2.5 million square feet of construction projects were completed. Of that, 1.4 million square feet were speculative projects. An additional 5.1 million square feet of office projects are currently under construction, including 12 speculative buildings, which will total 2.6 million square feet. Of this spec space, 30.7% has already been pre-leased. During the third quarter, an additional 2 million square feet of projects will break ground.

The Bureau of Economic Analysis reported on Thursday that U.S. personal income was up $58.8 billion, or 0.4 percent, in May compared with April. Personal consumption expenditures – or PCE, as the government calls people out buying things — increased $18.3 billion, or 0.2 percent, month over month.

It turns out, however, that the increase in spending was due to rising prices, even though inflation is still fairly modest. Real PCE — PCE adjusted to remove price changes — decreased 0.1 percent in May, compared with a decrease of 0.2 percent in April.

The PCE price index increased 0.2 percent in May, the same increase as in April, and excluding energy and food, the month-over-month increase was also 0.2 percent. Compared with a year earlier, the May 2014 price index for PCE was up 1.8 percent, or roughly the same as the CPI. Take food and energy out of the equation, and the PCE price index was up 1.5 percent in May 2014 compared with May 2013.

Mortgage Delinquency Rates Edge Down

Freddie Mac said on Thursday that the single-family serious delinquency rate for mortgages that it owns or insures declined from 2.15 percent in April to 2.1 percent in May. The current rate is down from 2.85 percent compared with May 2013, and is in fact the lowest rate since January 2009; the GSE’s serious delinquency rate peaked in February 2010 at 4.2 percent.

According to the company’s reckoning, “serious delinquencies” involve mortgage loans that are “three monthly payments or more past due or in foreclosure.” Such loans are rarely cured with back payments, but rather end up in foreclosure or a short sale. The “normal” rate for serious delinquencies – the pre-recession average — is about 1 percent, so the current rate is still elevated.

Separately this week, Freddie Mac released its Multi-Indicator Market Index (MiMi), which tracks the U.S. housing market. According to MiMi, most housing markets remain weak despite declining mortgage delinquencies, improving local employment, house price gains, and attractive mortgage rates.

The national MiMi value stands at -3.01 points, indicating a weak housing market overall with only a slight improvement (+0.05 points) from March to April and a three-month trend change of (+0.07 points), which is considered flat. However, on a year-over-year basis, the U.S. housing market has improved by 0.65 points as reflected in the national MiMi, according to the GSE.

Wall Street had a modest down day on Thursday, with the Dow Jones Industrial Average off 21.38 points, or 0.13 percent. The S&P 500 was down 0.12 percent and the Nasdaq declined a scant 0.02 percent.

TAMPA, FL—With a record low cap rate for unanchoredretail that some brokers say signals a recover, East Bay Plaza has trade hands. The Largo, FL retail center sold for $2.95 million in an all-cash deal. The sale price represents $283.63 per square foot.

“The in-going cap rate of 7% is the lowest we have seen for a stable retail center in years,” Franklin Street’sJonathan Graber tells GlobeSt.com. “The market for unanchored retail centers has been improving since 2013 and is approaching levels last seen in 2007 and 2008.”

“The seller was an experienced retail owner and developer out of Southeast Flora,” Wright said. “This retail center is located in one of the area’s most important retail sub-markets.

As Graber sees it, this is happening for several reasons. He lists the reasons as: record-low cap rates for triple net and multifamily property; historically low interest rates; a lack of new construction; positive absorption of retail space; and access to attractive financing.

Built in 2008, the 10,401-square-foot unanchored retail plaza is 100% occupied with a mix of national and regional tenants including Einstein Bagels, Anytime Fitness, Liberty Tax Service, Radio Shack, and Zoom Tan. The deal also included a long-term billboard lease.

“With Kimco Realty working on one of the area’s largest retail redevelopments across the street and Walmart opening a new supercenter on the opposite corner earlier this year, this intersection continues to gain in value,” Write tells GlobeSt.com. “Additionally, this area of Pinellas County has some of the strongest population densities and traffic counts in all of Tampa Bay.”

East Bay Plaza is located at 5395 East Bay Drive in Largo, FL. It sits on the southwest corner of US 19 and East Bay Drive.

Truth: Getting started in real estate investing and help it grow is not a stress-free endeavor. In fact, if you can’t handle stress well, you might not succeed as an real estate investor or entrepreneur. But before you throw in the towel, try these 5 techniques that can bring down your blood pressure. Best of all, they’re totally $FREE$.

1. Drink a Cuppa

So many of us rely on coffee to get us through our day, but tea is where it’s at. Rather than sending us jittering through our day, certain teas like chamomile and lavender can calm us down and help us focus on the task at hand.

Keep an electric kettle, teacup, honey, and selection of tea near your desk so you always have a cup of calm within reach.

2. Find a Better Breath

When you’re uptight, pay attention to your breathing. I’m willing to bet it’s tight and shallow. But deeper breaths from your diaphragm can not only reduce stress almost instantly, but also lower your blood pressure and help you calm down.

Try it now: sit up straight and inhale slowly and deeply. Pause at the top of that breath. Then let it out slowly. After a few of these, you’ll forget that your supplier sent you the wrong product.

3. Go for a Walk

It’s amazing what a change of environment can do for you. It’s all too easy to feel trapped in your office, which does nothing positive for your stress level. Instead, take a walk. It doesn’t have to be long or go very far. Even a five-minute stroll around the parking lot can help you unwind.

Pack your walking shoes and keep them handy so you never have the excuse of wearing the wrong shoes to walk!

4. Leverage the Break Room

There’s a reason that room at the end of the hall is called the “break room!” Schedule a couple of time-outs each day and enjoy that cup of tea there. Bonus points if you find a co-worker to chat with. Casual conversation is also a great stress reliever.

No matter how you decide to manage your stress, the key is being aware of your levels and knowing when you need relief. Unchecked, high stress levels can cause you to crack, explode at your staff, or even cause health problems, so take care of them before you get to that point.

5. Try Desk Yoga

No, you don’t have to take an hour out of your day and bucks out of your wallet to reap the benefits of yoga. You can even try yoga at your desk, just a few minutes a day, to see results.

Here’s a favorite of mine: pull away from your desk in your chair with your arms on the edge of your desk, shoulder-width apart. Stretch as far as you can until it feels good, with your back flat. This helps loosen up those tight shoulders and neck. Reading about yoga also makes me feel good, so take two minutes to read a great article.

Real Estate investing can be stressful and finding ways free and easy ways to deal with it will take you very far in your entrepreneur journey.

BOCA RATON, FL—Too many apartments, not enough renters? Will an oversupply of development saturate newly recovering markets? How much is too much? Those are the questions that still hit home for multifamily investors in 2014. But are the worries legitimate? For some markets, perhaps. But Jones Lang LaSalle predicts 14 cities will overcome oversupply issues, with Sunbelt markets such as Tampa, Jacksonville and Phoenix shining brightly in the year ahead.

“Besides construction levels, it’s all about job growth and household growth—those are the two critical demand factors that will determine how metros will perform through the current development cycle,” said Jubeen Vaghefi, international director and leader of the firm’s Multifamily Capital Markets group. “The surprising news to many will be the resurgence of the sunbelt markets over the tech-heavy regions. After some very tough years, that’s where we’re seeing a significant rise in new households as a result of improving economic conditions.”

According to JLL’s Multifamily Outlook report, released last week at the National Multi Housing Council’s Annual Meeting here, the national apartment sector expansion continued in 2013 as occupancy reached a 10-year high of 95.8% and gains averaged 13 basis points a quarter. In addition, as expected, 2013 turned out to be a record-breaking year for multifamily sales as volumes totaled more than $100 billion—outpacing 2012’s velocity by nearly 30% and surpassing the 2007 record by nearly $6 billion. New York, the greater Washington, DC area and Los Angeles led in sales volumes with a combined total of more than $30 billion. Dallas and Houston rounded out the top five, followed by San Francisco, Atlanta and Phoenix.

“A large component of these record volumes was needle-moving portfolio sales, ownership entity transfers and mergers of major apartment operators,” explained Brady Titcomb, vice president and director of US Multifamily Research at JLL. “In addition, the US recovery over the past 12 months, rising consumer confidence and still historically low interest rates played a critical role in aiding growth by propelling the housing market recovery.”

On a year-over-year basis, the JLL report showed that Seattle, Nashville, San Francisco, Denver and Houston have led in annual rental growth averaging between 4.5% and 7%.

The report also showed that since 2012, uncertainty overseas has driven demand for US multifamily product back to pre-recessionary levels. While international capital has found its way to nearly all of the major metros, Dallas, New York, Chicago, Houston and South Florida each saw more than $300 million in cross-border capital since the start of 2012.

According to the NMHC’s quarterly survey of apartment market conditions released in October, following four years of almost continuous growth, apartment markets have begun to slow. NMHC’s vice president of research and chief economist, Mark Obrinsky, says, “Conditions cannot continue to improve indefinitely and new development is at least somewhat constrained by available capital, though more on the equity than the debt side.”

But overall, the strength of the fundamentals will continue to propel the sector, according to Vaghefi, “We expect multifamily performance to remain strong for the foreseeable future. While there are some supply concerns that will slow the pace of occupancy and rent growth, overall the anticipated increase in job growth and household formation will help to mitigate the threat of oversupply and keep conditions balanced across the country.”

With continued improving economic conditions nationally, JLL anticipates US occupancy gains to average 40-60 basis points annually over the next three years. Assets located in secondary markets and value-add opportunities will be in higher demand as the search for yield becomes increasingly difficult.

“As a progressive and evolving being, man is where he is that he may learn that he may grow; and as he learns the spiritual lesson which any circumstance contains for him, it passes away and gives place to other circumstances.” –As A Man Thinketh

It has taken me a long time to be able to look at a problem I’m having as a necessary spiritual lesson. To be frank, I’m still not always really excited to be enduring the pain and frustration that negative circumstances usually cause. Some days I’d like to “play hooky” and skip the lesson.

But as I look back at my life, it is easy to see that the times when my wisdom and understanding grew to new levels; those times when I approached becoming the person I long to be; it was always the times that followed negative circumstances. The greatest growth you’re going to have is going to come from the negative circumstance you have today that sometimes seems too overwhelming, too big to scale.

Writing in Byways of Blessedness, James Allen is strong in his call for us to embrace our circumstances. “Let a person rejoice when he is confronted with obstacles, for it means that he has reached the end of some particular line of indifference or folly, and is now called upon to summon up all his energy and intelligence in order to extricate himself, and to find a better way; that the powers within him are crying out for greater freedom, for enlarged exercise and scope.

“No situation can be difficult of itself; it is the lack of insight into its intricacies, and the want of wisdom in dealing with it, which give rise to the difficulty. Immeasurable, therefore, is the gain of a difficulty transcended.”

Maybe that explains why it sometimes seems that I can’t shake a particular problem, or I have one that keeps rearing its ugly head. Instead of fighting it, I need to jump in and gain the insight and wisdom to handle it. Then it would be gone, and I would be ready for the next lesson—only stronger, both in spirit and in wisdom!

We all come into this world the same: naked, scared, and ignorant. After that grand entrance, the life we end up with is simply an accumulation of all the choices we make. Our choices can be our best friend or our worst enemy. They can deliver us to our goals or send us orbiting into a galaxy far, far away.

Think about it. Everything in your life exists because you first made a choice about something. Choices are at the root of every one of your results. Each choice starts a behavior that over time becomes a habit. Choose poorly, and you just might find yourself back at the drawing board, forced to make new, often harder choices. Don’t choose at all, and you’ve made the choice to be the passive receiver of whatever comes your way.

In essence, you make your choices, and then your choices make you. Every decision, no matter how slight, alters the trajectory of your life—whether or not to go to college, who to marry, to have that last drink before you drive, to indulge in gossip or stay silent, to make one more prospecting call or call it a day, to say I love you or not. Every choice has an impact on the Compound Effect of your life.

By employing the same idiot-proof strategies I’ve used to catapult my own life and career, strengthened by the Compound Effect, you’ll be able to loosen the mysterious grip of the things that are unwinding your life and pulling you in the wrong direction. You’ll be able to hit the pause button before stumbling into idiot territory. You’ll experience the ease of making decisions that lead to behaviors and habits that support you, every time.

Your biggest challenge isn’t that you’ve intentionally been making bad choices. Heck, that would be easy to fix. Your biggest challenge is that you’ve been sleepwalking through your choices. Half the time, you’re not even aware you’re making them! Our choices are often shaped by our culture and upbringing. They can be so entwined in our routine behaviors and habits that they seem beyond our control. For instance, have you ever been going about your business, enjoying your life, when all of sudden you made a stupid choice or series of small choices that ultimately sabotaged your hard work and momentum, all for no apparent reason? You didn’t intend to sabotage yourself, but by not thinking about your decisions—weighing the risks and potential outcomes—you found yourself facing unintended consequences. Nobody intends to become obese, go through bankruptcy, or get a divorce, but often (if not always) those consequences are the result of a series of small, poor choices.

For instance, you inhale a soda and bag of potato chips and suddenly realize only after you polished off the last chip that you blew an entire day of healthy eating–and you weren’t even hungry. You get caught up and lose two hours watching mindless TV—scratch that, let’s give you some credit and make it an educational documentary—before realizing you spaced on preparing for an important presentation to land a valuable client. You blurt out a knee—jerk lie to a loved one for no good reason, when the truth would have worked just fine. What’s going on?

You’ve allowed yourself to make a choice without thinking. And as long as you’re making choices unconsciously, you can’t consciously choose to change that ineffective behavior and turn it into productive habits. It’s time to WAKE UP and make empowering choices.

San Diego’s apartment market has historically been reliably steady, but rarely a top performer in terms of rent growth. But in 2013, rent growth in San Diego topped the levels seen for the U.S. overall and for most other Southern California markets.

San Diego Performance Highlights Q4 2013

San Diego is one the nation’s more steady and reliable apartment markets; in good times it doesn’t post especially good revenue growth but in bad times it doesn’t post especially bad losses.

But at the end of 2013, San Diego is starting to see some pretty good momentum just as the U.S. average rent growth change has started to cool. As of Q4 2013,San Diego registered 3.6% rent growth while the U.S. apartment market as a whole registered 2.9%.

One of the driving factors for this growth has been a strong economy. In 2012, employment hit a decade high in the metro and while job numbers cooled slightly in 2013, the market experienced a 1.8% job expansion rate, good enough for second best in Southern California. San Diego is also the first Southern California market to return to pre-recession employment levels.

With solid rent growth and a strong economy, it’s no surprise to see occupancy performing well. As of Q4 2013, occupancy is at a healthy 96.4%, a level the metro has sustained for the past three years.

Despite the good news, there are two potential market factors that could change this momentum. One, the metro’s job growth has been primarily fueled by lower paying jobs, when traditionally limits rent growth; and two, construction is up to decade-high levels (a potential 1.9% expansion rate). But given these factors, MPF Research expects occupancy to hold steady in 2014 while rent growth cools slightly to 2.9%.